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Ezel / Tax Rulings / TX
TX 9302L1227E08 Motor Vehicle Tax 1993-02-01

Could Texas use tax on an out-of-state leased vehicle entering Texas be calculated on depreciated value?

Short answer: No. The use-tax base was the total consideration paid in the out-of-state sale, defined as the vehicle's cost. The Tax Administration Division said a legislative change would be required to use depreciated value or a similar reduced base.

Apply this to your situation

This page answers the general question as of 1993. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1993
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Tax Administration letter issued on one 1993 question about a leased vehicle brought into Texas. It predates modern Private Letter Ruling reliance terms and cannot bind the Comptroller for unrelated taxpayers. Section 152.002, vehicle cost, use-tax base, lease treatment, depreciation, highway use, credits, and operator liability may have changed. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The Texas Tax Administration Division said use tax applied when an out-of-state-purchased vehicle was brought into Texas for use on Texas highways.

Tax was computed on the total consideration paid in the out-of-state sale. Texas Tax Code § 152.002(a)(1) defined that amount as the vehicle's cost.

The letter rejected using depreciated value or a similar reduced measure and said that change would require legislation.

What this means for you

Vehicle lessors, lessees, and fleet operators

The historical tax base followed original acquisition cost rather than the vehicle's value when it entered Texas.

Fleet accountants

The letter did not authorize depreciation deductions.

Common questions

Q: Was depreciated value allowed?

A: No.

Q: What was the tax base?

A: Total consideration, defined as vehicle cost.

Citations and references

  • Texas Tax Code § 152.002(a)(1) — cited for the cost component of total consideration.

Source

Original ruling text

February 1,1993

Dear ****:

Thank you for your letter concerning the taxability of leased motor
vehicles brought into this state.

The Texas Tax Code imposes a use tax on a vehicle purchased outside this
state that is brought into this state for use on Texas highways. The
statute also provides that the tax is computed on the total consideration
(purchase price) paid on the out-of-state sale. Section 152.002(a)(1)
further defines total consideration as "the cost of the motor vehicle."

It would be necessary for a legislative change in order to tax the
incoming lease vehicle on a depreciated value or similar basis.

Please feel free to contact Curt Swenson toll-free at 1-800-513-5441,
extension 3-4684, if you would like to discuss this matter. Curt is the
agency's motor vehicle tax specialist.

Sincerely,

Mike Doyle
Director, Tax Administration

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